Protected Designation of Origin, or How to Increase Margins

The UK currently has 78 registered PDOs, which effectively create a brand for locally produced food (and drink) that cannot be copied. For example, a sparkling wine is only called Champagne (a PDO) if it comes from the Champagne region and is produced under the appellation rules. This is an EU food naming scheme that protects regional and traditional foods, whose authenticity and origin can be guaranteed, from being copied by other producers.

Under this system, a food or drink name/brand is registered at a European level and receives legal protection against imitation throughout the EU.  Any product registered under this system must include the EU logo on the food label.

The 78 protected names in the UK, include food products, wine, beers, ciders, spirits and wool. Some are household name, such as Stilton Blue cheese, Cornish Pasty, Melton Mowbray Pork Pie, Scotch Beef, Traditionally Farmed Gloucestershire Old Spots Pork or Traditional Farmfresh Turkey.

Any individual food producer can apply, or a group can be formed with other interested parties, such as someone who sells your produce, and there is no limit to the number of people in the group. While it may take up to four years for the name to be legally protected, once granted protection lasts indefinitely. For the agricultural community, PDOs provide a unique opportunity for regional or traditional foods to protect themselves against imitators, attract a premium price and improve consistency of demand.

An EU-funded study by AND-International in 2012 calculated this scheme resulted in a 7% premium over non-guaranteed products for the same volume, while a 2008 London Economics study showed that traders and retailers mostly viewed the scheme’s benefit as contributing to their reputation and stability of relationships, and less so to margins.  This highlighted the schemes yielded higher prices for most products, but were sometimes costlier to produce, reflecting higher production, certification and producer group costs. Nevertheless, in 66% of cases, the profit margin for the PGO/PDI products was higher than comparator products.

Working across all of Britain’s farming community, we see many examples of excellent local produce that is unique to the area. While Brexit may change farming, we believe the EU is likely to insist on the UK recognising EU PDOs (and vice versa) in any trade agreement, particularly given previous conflicts over products such as US parmesan cheese.  We suspect that as PDOs are established by EU regulations that should lapse on Brexit, the opportunity to submit a registration (that should well be grandfathered) will only run for the next two years (assuming a March 2017 Article 50). However, the ‘vested rights’ legal concept may well apply, meaning that the right to protection for a PDO comes from the EU treaty and the right to that protection is ‘vested’ and should continue after the treaty stops. Therefore, if you’re thinking about protecting your local produce, don’t hang around!

 

By: Rob Suss

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